Volvo Cars welcomes Polestar';s strengthened business plan

Rhea-AI Summary

Volvo Cars (VOLV-B.ST) welcomes Polestar's strengthened business plan aiming for growth and profitability, indicating gross margins in the high teens by 2025 and a cash flow break-even point in the same year. Volvo Cars will provide financial support to Polestar through an extension in the maturity of an existing term loan and an increase in the existing facility by USD 200 million. Geely Holding will also provide financial support to Polestar via a USD 250 million new loan.

Positive

• Polestar's strengthened business plan signals a positive trajectory for growth and profitability, with expected gross margins in the high teens by 2025, and a cash flow break-even point in the same year. Volvo Cars' financial support through an extension in the maturity of an existing term loan and an increase in the existing facility, as well as Geely Holding's financial support, demonstrate a commitment to facilitating Polestar's transition towards a more profitable future.

Negative

• None.

GOTHENBURG, Sweden, Nov. 8, 2023 /PRNewswire/ -- Volvo Cars welcomes the strengthened business plan announced by Polestar today, which aims to take the company into a new phase of growth and profitability. Please see the announcement from Polestar here.  

 Polestar will adopt a variety of steps to improve profitability, which includes cutting costs and driving efficiencies in the business. Polestar has indicated that these are expected to result in gross margins in the high teens for the fiscal year 2025.  

 These measures which form part of the strengthened business plan, are designed to enable the company to reach a cash flow break-even point in 2025.  

Polestar is working to secure external funding in the form of additional debt and equity raises to meet its remaining funding needs until it reaches the cash flow break-even point in 2025.  With 48.3% ownership of Polestar, Volvo Cars is helping to facilitate the transition of the company towards a more profitable future by providing limited financial support to meet their immediate funding needs. 

This new financial support from Volvo Cars will be provided in two ways, both related to the loan provided by Volvo Cars in November 2022. One, through an extension in the maturity of the existing USD 800 million term loan from May 2024 to June 2027. Second, Volvo Cars will increase the existing facility by USD 200 million on top of the USD 800 million already provided, with all other terms remaining the same. 

As previously indicated, Volvo Cars has the option of converting part of the total outstanding loans into new equity in Polestar. However, Volvo Cars has no intention of increasing its shareholding in Polestar beyond its current share.  

 
In addition, Geely Holding will provide financial support on substantially the same terms to Polestar via a USD 250 million new loan, with the option of converting this into equity at a later point. 

 
"Polestar is on the verge of entering a new phase of growth and profitability with the rollout of the Polestar 3 and Polestar 4," says Johan Ekdahl, chief financial officer of Volvo Cars. "The strengthened business plan is designed to make Polestar more financially stable while pursuing its business objectives in a profitable way." 

CONTACT:

For further information please contact:

Volvo Cars Media Relations
+46 31-59 65 25
media@volvocars.com

Volvo Cars Investor Relations
John Hernander
+46 31-793 94 00
investors@volvocars.com

 

The following files are available for download:

https://mb.cision.com/Main/20685/3871883/2417939.pdf

Release

View original content:https://www.prnewswire.com/news-releases/volvo-cars-welcomes-polestars-strengthened-business-plan-301982375.html

SOURCE Volvo Car AB (publ)

FAQ

What is Polestar's strengthened business plan aiming for?

Polestar's strengthened business plan aims for growth and profitability, with expected gross margins in the high teens by 2025 and a cash flow break-even point in the same year.

How is Volvo Cars supporting Polestar financially?

Volvo Cars is providing financial support to Polestar through an extension in the maturity of an existing term loan and an increase in the existing facility by USD 200 million.

What financial support is Geely Holding providing to Polestar?

Geely Holding will provide financial support to Polestar via a USD 250 million new loan.

What is the ownership percentage of Volvo Cars in Polestar?

Volvo Cars has 48.3% ownership of Polestar.

What are the upcoming models for Polestar?

Polestar is set to roll out the Polestar 3 and Polestar 4.

Who is the chief financial officer of Volvo Cars?

Johan Ekdahl is the chief financial officer of Volvo Cars.